Bitcoin has been bullish in November. It should be noted that this rally is going against a prevailing downtrend that is intact. As we approach the end of the week, the virtual currency is testing a cluster of support, at the cusp of shifting away from this week’s bullish mode.
Looking at the 1H bitcoin chart, we can see a few bullish technical conditions since rallying from around 318.
1) 200-, 100-, and 50-hour simple moving averages (SMAs) have bullish slope and are now in bullish alignment while price is trading above them.
2) The RSI has tagged 70 and has held above 40, showing persistent bullish momentum.
3) Most importantly, there has been higher highs and lows, with price holding above a rising trendline formed this week.
As price retreats from 350, it is now testing the 338-340 area which involves the rising trendline, the 50-hour SMA, and a previous resistance pivot. Note that price made a lower low of significance for the first time this week, so we do have a legitimate early bearish continuation signa lif price does break below 338.
Support 2, Bearish Continuation Scenario:
In the near-term bitcoin might see support aroudn 331, where we have another support/resistance pivot, and the 200- and 100-hour SMAs. At that point, the RSI should correspondingly test 40. If price breaks below 330, and the RSI breaks below 40, we should have a bearish continuation.
If price instead bounces up from this 330 support area, let’s see how it reacts when it comes back to that 338-340 area. If price holds below this area, or cracks it and comes right back down, the bearish continuation scenario might still be in play. especially if the 1H RSI fails to return back above 60.
I favor the bearish continuation scenario because the prevailing trend is bearish. A break below 330 would open up the 318 low on the month. Below that the 285 October, and 2014 low is in sight with risk of further downside. However, as we can see in the 4H chart, price did break above a falling trendline from October’s high of 408. Again, if price breaks below 330, we can revive the bearish trend, otherwise, the bullish breakout would still be in play.
(click to enlarge)
Now, if price does not break below 330, and then returns above 340, while the RSI also holds above 40 and returns above 60, bitcoin will likely be continuing this week’s bullish correction mode. A break above 350 then opens up a bullish outlook toward
1) 360 support/resistance pivot.
2) 388 resistance
3) 408 October high.
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